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Amazon Shares Rise 3% In Anticipation of Prime Day

Ticker Symbol: AMZN

Amazon.com Inc’s shares were trading 3% higher today as the company approaches its annual Prime Day event, a two-day discount shopping occasion for Amazon Prime members, set for July 12th and 13th.  The company typically reports certain metrics for the two days within 72 hours of its completion. Given low projections for growth in the top line from analysts this year for the event, investors may be betting that the company could outperform those reduced expectations.

In 2021, the Prime Day generated roughly $9.5 billion in gross merchandise value, relative to the $9 billion in the 2020 season when the event was delayed due to the COVID pandemic by a few months to October. Sales growth is expected to accelerate from 7% in the year-ago period, to roughly 17% this year, according to Insider Intelligence, but would still lag the 54% growth the company saw in 2020.

The Prime Day event is only available to Amazon Prime members. Amazon Prime membership is the $139 annual fee subscription service from Amazon that offers its customers free two-day shipping, music subscription, video streaming, and reading benefits in the U.S. The company offers the same membership package at different price points and slightly different benefits across the globe.

There are over 200 million Amazon Prime subscribers worldwide, and the company is experiencing strong growth in its retail business in the Asian and Latin American markets, where its increasing market share. That’s in contrast to the U.S. where sales have stagnated recently. For Prime Day 2022 to be a success, Amazon would have to generate at least some growth in North America and produce double-digit growth in key expanding markets such as India, the UAE, and Brazil.

Amazon’s other businesses have continued to grow more rapidly that its gigantic retail business, buttressing the company’s overall financial picture. Amazon Web Services, the largest cloud services provider in the world, reported revenue of $18.4 billion in the first quarter of 2022, while the company’s advertising revenue grew by 25% year over year. AWS sales were up 37%, higher than the 32% growth achieved in Q12021, and may provide a bulk of the profits the company generates in this fiscal year.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.